AAPL: ‘Flash Dump’ Closes Stock at $439.88, Says ZeroHedge

By Tiernan Ray

Apple (AAPL) shares closed down $10.62, or 2.4%, at $439.88 this afternoon. ZeroHedge’s Tyler Durdenpoints us to what appears to have been a “flash dump” in the closing moments of the market, noting a large block of $350 million worth of stock in the waning minutes of the session:

Unlike traditional flash crashes where the trade is an HFT error, or a few shares traded through the entire bid or offer stack, in this case it looks like a very premeditated unloading of some 800K shares (some $350 million worth) of AAPL in the last second, with the full knowledge it was shake the market. Why anyone would want (or wait until the very last second) to do that, while covering the offsetting ES short in the pair trade, to ramp the market into the close, is anyone’s guess.

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There are 39 comments

JANUARY 25, 2013 4:59 P.M.

Wall St. Scam wrote:

Wow, what a scam. The whole system is wrecked. How can you just dump $350 million worth of stock all at once?

JANUARY 25, 2013 5:00 P.M.

bill wrote:

English much?

JANUARY 25, 2013 5:06 P.M.

Dave wrote:

Any one's guess? There's no guess about it. Someone wanted the stock to continue to decline in after hours in that premeditated move. Maybe they want further declines next week too.

JANUARY 25, 2013 5:08 P.M.

Lynn wrote:

I sold on $ 550, ready to buy back on $400

JANUARY 25, 2013 5:09 P.M.

Jake_in_Seoul wrote:

Wow, thanks for the quick heads up. The guy at NANEX deserves his own division at the SEC, but I'm not holding my breath.

Universal rhetoric of Apple's failure this, decline that, mismanagement everywhere, ad nauseum aside, IMO the last few months of AAPL pps movement will one day be studied as a classic example of market manipulation.

JANUARY 25, 2013 5:18 P.M.

Hacket wrote:

Meanwhile the SEC drawing their healty paychecks and bonuses while they are sleeping at the wheel...........

JANUARY 25, 2013 5:20 P.M.

Hacket wrote:

Meanwhile the SEC drawing paychecks and big bonuses while they are sleeping at the wheel.............

JANUARY 25, 2013 5:20 P.M.

Dean Scarpinato wrote:

The big boys were pinning at 440 so that puts would expire worthless just like they hit 500 last Friday

JANUARY 25, 2013 5:33 P.M.

Batman, NYC wrote:

Good observation Tiernan. It looks like someone wanted to make the AAPL market cap to go below XON at the close of market to have a story for the weekend. Is there a way to find out who that was? Did he or she lose money?

JANUARY 25, 2013 6:30 P.M.

jonsings wrote:

I would take the company out of the US and slam the door shut behind me. Phew!!

JANUARY 25, 2013 6:37 P.M.

Dr. Anthony wrote:

The last second dumping of 800,000 shares of Apples WHILE, at the same time, covering the paired short, should mean one thing to the retail investor. "You cannot compete with High Frequency Traders; Algorhythms and Hedge Funds. If it feels like you are a piece of floatsam, careening down a white water rapids, then you are feeling the truth. Dear Retail Investor: May you rest in piece.

JANUARY 25, 2013 6:38 P.M.

Kyle wrote:

Market manipulators? Hate to sound like a conspiracy theorist, but this stock has behaved irrationally lately. Someone is trying to push the price down more to load up on shares as cheap as they can. Watch the volume of this stock in the coming weeks. I bet it'll be insane.

JANUARY 25, 2013 6:38 P.M.

Jesse Kumin wrote:

What an amazing coincidence that AAPL would drop $4.12 in the last 180 seconds of trading to just below $440, closing at $439.88. I'm sure it had nothing at all to do with the over (198,000) $440, $445 and $450 call contracts representing 19.8 million shares, traded today at up to $16 that expired worthless and the (211,000) $440, $445 and $450 put contracts representing 21.1 million shares that surged in value on the sudden dive of AAPL as 2 million shares were dumped on the market in the last three minutes. Of course there's no transparency on trading, so we don't know who dumped the 2 million shares and whether or not they had sold calls that became worthless and purchased puts that tripled in value in the space of a few minutes.

What I suspect is that some of these hedge fund brokers buy and sell the shares to themselves between different accounts. If this were true, they could raise or drop the share price with no loss, with the purchase or sale of millions of shares in the space of a few minutes incurring insignificant transaction fees and almost no tax.

Wall St. buys the politicians that write the rules and appoint the SEC Commissioners who selectively enforce the rules that Wall St. paid for. Thieves don't want anyone looking over their shoulders while they steal, hence the lack of transparency on large block equity and option trades. We have no way of knowing who dumped 2 million shares in the last three minutes today and who stood to gain from the dive in price. The fact that what happened might be illegal is of minor concern when no one can see, there are few SEC employees policing the trades, the press ignores the manipulation of share prices every Friday and no one ever goes to jail for crooked financial dealings.

JANUARY 25, 2013 6:51 P.M.

Mike_LaCagnina wrote:

IPod, iPhone, iPad and now iPlummet. I been sayin this since AAPL hit $700.

JANUARY 25, 2013 6:53 P.M.

Paul wrote:

Wow, so the market is being manipulated. This is news? It happens every single day, the stock market is an enormous, steaming cesspool of greed and deceit. Just another way for the 1% to steal money straight from the pockets of the 99%.

JANUARY 25, 2013 7:17 P.M.

techy46 wrote:

Arbitrage systems, automated trading, are preconditioned to react with total disregard to human significance of the action. It maybe that a trigger fired based on volume, trading range, call spreads or whatever. Anyway, small investors have to look at the intrinsic vaues and ignore all the histreia and relgious noise.

JANUARY 25, 2013 7:56 P.M.

Charles wrote:

Smell like certain HF

JANUARY 25, 2013 8:00 P.M.

Joe Smith Jr. wrote:

I don't care if it's going to 400 or below in the next few weeks or so... let the traders obliterate each other. My horizon is long and I know, if Apple continues to earn $13B every quarter, it'll be back up again at some point in the future. Hang tight and you'll be rewarded.

JANUARY 25, 2013 8:06 P.M.

Ed wrote:

Netflix up 73% in 3 days and they earned
20 cents. Only the big insiders knew this
like Ichan and Hastings and all the other
Crooks and they made billions!!! What a scam
and a set up. Perhaps Reed Hastings
can bring his Smoke and Mirror show
to Apple. Reed Apple's new CEO

JANUARY 25, 2013 9:07 P.M.

doooogies wrote:

It looked like a hedge fund dumped their shares at 1559.25. Selling shares at 425 to 441 in order to drive the stock dn. Take a look at the feb 13th 510 puts sold. Some one making $$$$

JANUARY 25, 2013 10:28 P.M.

Anonymous wrote:

Obviously, it was hedge fund MANIPULATION. WHERE IS THE SEC?

JANUARY 25, 2013 11:41 P.M.

Joemiz wrote:

SAMSUNG GALAXY S4 COMING WHAT KILLED APPLE

JANUARY 26, 2013 3:50 A.M.

Mister Z wrote:

Flash dump? Perfect, don't change a thing.
Prune juice for everyone..

JANUARY 26, 2013 8:04 A.M.

Jose79845 wrote:

Apple lost their pot smoking genius. The company is being run by technically competent people with no imagination. Perhaps if Nixon hadn't started spraying long term poison paraquat on Mexican marijuana, Steve would still be alive today.

JANUARY 26, 2013 9:50 A.M.

morris99 wrote:

I love the conspiracy theorists that crawl out of the woodwork every time one of their darlings gets bashed..now let me get this straight.Apple had an unabated run from $280 straight up to $700 & no one was crying foul..what was it supposed to do?..become a 10 trillion dollar company?...they make phones and tablets/desk-tops for gods sake..they're extremely good at what they do..$137 billion in cash will cushion the fall and shortly in a qtr. or two the stock will right itself and trade up again..how high?.my crystal ball is fuzzy so no answer to that question..but the last time i looked money could be made in the market on the downside as well as the upside..pick your direction..do your homework and play the game...& of course...good luck!

JANUARY 26, 2013 9:55 A.M.

Joseph Canepa wrote:

My guess hear is that all of this is sector rotation. Apple is big enough to be a sector by itself. In normal times a leadership stock such as Apple tanks so will the whole market. Today we have very strong market, so my guess is money is coming out of Apple into other equities;

Part of this is media hype. How many people know that Apple December 2011 had 14 weeks while the December 2013 had 13 and there was no Sandy in 2011?

The other part is mega banks and hedge fund collusion. Obama missed the boat here as Harry Makopolis should have been made the SEC Chair. He knew that Madoff's returns were impossible and would probably think that any institution that consistently racks up 20% or more in annual returns is probably doing something illegal.

The investor here should look at this as a unique opportunity to buy a unique company, on the cheap.

JANUARY 26, 2013 10:23 A.M.

Anonymous wrote:

Samsung innovation is to blame?? Talk about falling for the hype. Cramming useless features into plastic phones with virus bait operating system given away free by company to sell you add you don't want is innovation? Ok. Or must be those phabulous phablets.

JANUARY 26, 2013 10:33 A.M.

Batman, NYC wrote:

Good insight by most comments. Someone has to look into these practices and I certainly hope someone does.
It looks like a desperate move though. The foundamentals of AAPL are good and when the manipulators find other opportunities to short, things will be more rational. In fact the same folks just primed a few companies for shorting. It will happen sooner than you think.

JANUARY 26, 2013 10:56 A.M.

John Reilly wrote:

Thanks for the observation Tiernan. Great comments too. I especially liked Morris99, Jose79845 and Jesse Kumin. Goes to show you don't ever know. Watch each card and play it slow.

JANUARY 26, 2013 11:38 A.M.

aapl of your eye wrote:

aapl was holding the 443/445 level all afternoon and appeared headed back to 450 before the dump / i expect aapl to open above 443 Monday morning and make an attempt at 450 IMO

JANUARY 26, 2013 1:35 P.M.

PW wrote:

Although there are many possible answers to these scenarios. You might first want to understand the rules around Regulation NMS. For example, a 'Sweep and Cross' is a legal practice whereby a buyer or seller can trade outside the national best bid and offer within a defined % if they take out the top of book at all NMS market centers (i.e. NYSE/Arca, NASDAQ, BATS...). Thus a broker may agree to take on the risk of acquiring or selling a large block of stock from a customer at below or above the NBBO provided that that take all stock at the top of all market center books.

1) Seller wants to unload 850,000 shares of AAPL in one block
2) Broker will negotiate with the seller at say $10.00 below the NBBO for AAPL
3) Broker then BUYS or 'Sweeps' the top of book buy taking out all of the best bids at each of the regulated market centers
4) Broker then posts (reports) the cross for the large block of stock which then 'prints' and of course can then move the markets

Learn before you whine...

JANUARY 26, 2013 2:54 P.M.

frank wrote:

One thing I would like to know, where are the guys predicting aapl going to 1,000 and 1,001. They must be hiding behind a door. My wife hates wall street, can't even talk about it with her, she says its all manipulated, I'm sure she is right. Can't make any money in the bank so we might as well go along for the ride. Nflx goes up 70 bucks in two days on 13 cents in earnings, are you kidding. The P/e was 506 on the stock before the leap, what is going on here. I'm afraid to say it but it all sounds like the dot com era all over again, stox went up 50-75 bucks in a flash, we all know how it ended. Heaven help us

JANUARY 26, 2013 5:45 P.M.

At 420 AAPL can only go Higher wrote:

And that's being BLUNT

JANUARY 27, 2013 12:25 A.M.

From Russia with Malice wrote:

Apple is the now the official Chernobyl of stocks. Following its huge meltdown, the whole company was left toxic, sickening and poisoning thousands of shareholders. No one will be moving back in Apple's area for the next 50 years. Apple is now inhabited by many thousands of penniless shareholder zombies, wandering around aimlessly and looking for some worthwhile stocks to devour. At least Apple's poisonous toxicity didn't spread to the rest of the world market. Every other stock was left untouched and was actually thriving grandly. Only Apple stock is horribly toxic and definitely unsafe to touch.

Tim Cook must have deliberately shut down all the cooling supply to Apple's reactors to cause such a gigantic meltdown. If Apple continues to melt down at this rate, Apple will make Chernobyl look like a lush wildlife park in comparison. What a screwup of a company. Sorry Steve, this is what happens when you don't choose a real CEO to leave your company to. Sorry, Apple fanbois, but tiny Netflix has suddenly become an investment worth more than all of Apple's obsolete iPhones.

JANUARY 27, 2013 3:54 A.M.

AdamC wrote:

Yes any tech company can make a billion of profits a quarter and it is a pity Apple can't make $5B of profits a quarter....../s

JANUARY 27, 2013 9:28 A.M.

TheCount wrote:

Where are the reporters in the mass media? The general public isn't reading barrons on the weekend. CNBC and Bloomberg should be digging into a story like this. Then maybe the SEC would get involved. And people wonder when the retail investor will get back into the markets.

JANUARY 27, 2013 10:52 A.M.

ANONYMOUS wrote:

Sheer manipulation..... NFLX is worse. SEC hibernated.

JANUARY 27, 2013 11:09 A.M.

Anonymous wrote:

Sheer manipulation... NFLX has been worse. SEC hibernated.

JANUARY 27, 2013 10:50 P.M.

Anonymous wrote:

wow -- fanboys become crybabies in a couple of days. The system wasn't rigged when the stock went up irrationally, but now that gravity brings it back down everyone is in collusion against you.
study fundamentals. study technicals. take profits. and hedge...
what goes up, must ______

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.